By Dan Bell
The NZD/USD opens at 0.8140/0.8160 this morning as global growth concerns and rising European bond yields weigh on investor sentiment.
Global equity markets are weaker across the board with European stocks down more than 2% - US equities are off more than 1.5% with the S&P 500 down 1.71%.
Commodities are also weaker across the board with the CRB Index down 1.43%, led by Oil prices off 1.25%, and Copper down 1.77%.
The VIX Index- a measure of implied volatility - and commonly referred to as the ‘fear index’ has leaped more than 10% over the last 24 hours to 21.00 as investors anticipate more volatility across financial markets.
Spanish bond yields approached 6% for the first time this year - and are close to record spreads versus German yields - Italian bond yields are up 20 basis points overnight.
Since early March, Spain's 10 year yield has risen 115 basis points while Italy's 10-year yield has risen by approx 100 points.
Higher borrowing costs make the outlook for Spain and Italy more problematic as they face slower growth, budget cuts and increasing unemployment.
The NZD is weaker against most major currencies and opens at current indicative levels - 0.7940 AUD, 0.6220 EUR, 0.5130 GBP and 65.70 JPY.
On the local front we get NZIER Business Confidence at 10am this morning. From Australia we get Consumer Sentiment and Home Loan data.
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here
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